Mumbai: India’s economic growth is expected to pick up faster than the rest of the world once a global revival begins, though it is difficult to predict when, the country’s central bank governor was quoted as saying.
In an interview with BBC World broadcast on Sunday, but taken before he left for a meeting of G20 in London, Reserve Bank of India governor Duvvuri Subbarao said Asia’s third biggest economy could be an engine for global growth. “India can be a growth engine. Not that India can recover ahead of the world. But when recovery starts, India’s recovery is going to be sharp and rapid,” Subbarao said. In January, the International Monetary Fund cut its forecast for global growth in 2009 to a slight 0.5% -- the weakest since World War II -- from a November estimate of 2.2%.
Even though India’s exports account for 14% of its GDP, much lower than some of its Asian peers, Subbarao said the global crisis has hit the Indian economy through the financial and manufacturing sectors, and said it was difficult to predict the timing of the recovery.
The Indian economy has slowed sharply as exports were hit and consumer sentiment was dented. It is expected to expand at a six-year low of 7.1% from an average rate of around 9% in the last three years.
Subbarao said India’s financial sector remains sound, safe and well capitalized and this was because of prudent policy actions taken by the government and the central bank.
Since the global crisis hit India’s shores in September authorities have rolled out two stimulus packages, duty and rate cuts with the latest rate cut just last week to shore up growth.
G20 finance ministers on Saturday promised the IMF money to help troubled countries and said they would use their full fiscal and monetary firepower to combat the worst economic crisis since the 1930s.
Subbarao said India has gained from globalization and would not turn away from it.
“Globalization is a double edged sword. It comes with benefits and costs so I don’t think pulling out of the global system is an option for any country.”